In this piece, we will take a look at the ten best wine stocks to invest in 2022. If you want to skip our industry introduction, then jump ahead to 5 Best Wine Stocks to Invest In 2022.
For the everyday investor, the recent economic turmoil ushered in due to the Russian invasion of Ukraine and coronavirus monetary stimulus packages is a double edged sword. While the cost of living is touching record levels, stock markets are jittery as the Federal Reserve Bank of the United States takes an aggressive approach to tackling inflation by relentlessly increasing interest rates and as a result, increasing the cost of borrowing for consumers.
However, even as the middle class decides between investing or saving, the world’s wealthiest are increasing their consumption. This has benefited high end industries, with the Wall Street Journal reporting that luxury goods sellers are increasing their marketing budgets as other companies falter during a time of historic economic crisis. It reports that St. Michelle Wine Estates Ltd., a Washington based winemaker, increased its marketing budget by 15% this year, and went on to quote the company’s chief executive officer as sharing that the sales of wines above the $15 price mark are growing.
The global wine market itself is quite sizeable, with several research reports placing its value at hundreds of billions of dollars. For instance, Vantage Research estimated earlier this year that the global wine market was worth $418 billion in 2021, and between then and 2028, it will grow at a compounded annual growth rate (CAGR) of 6.2% to touch $600 billion at the end of the forecast period. The research firm believes that the industry will benefit from the growing popularity of e-commerce, with some of the largest wine markets in the world, such as those in the U.S., U.K., Spain, and other European countries, already making strong progress to order their alcohol online.
For our piece today, we’ve taken a look at some of the top wine stocks in the industry, and some of the well known firms in our list are The Duckhorn Portfolio, Inc. (NYSE:NAPA), Diageo plc (NYSE:DEO), and Constellation Brands, Inc. (NYSE:STZ).
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Our Methodology
We took a broad view of the wine industry and studied factors such as dominant sectors and well performing markets to sift out the firms that are taking advantage of these beneficial situations. The companies themselves were then analyzed through their financial performance, market share, and other metrics.
Best Wine Stocks to Invest In 2022
10. MGP Ingredients Inc (NASDAQ:MGPI)
Kansas-based MGP Ingredients Inc (NASDAQ:MGPI) makes distilled spirits, wine, branded spirits, and food ingredients.
Last month, Wells Fargo said in a note that MGP Ingredients Inc (NASDAQ:MGPI) shares offer “reasonable” valuation. The firm likes MGP’s domestic and secular tailwinds as well as margin expansion. Wells Faro set a $126 price target on MGP stock based on a 25X P/E multiple and 17X EV/EBITDA multiple.
Several elite hedge funds tracked by Insider Monkey have stakes in MGP Ingredients Inc (NASDAQ:MGPI) as of the end of the second quarter. These include Driehaus Capital, Arrowstreet Capital and Ken Griffin’s Citadel Investment Group.
9. Corby Spirit and Wine Limited (OTCMKTS:CRBBF)
Number of Hedge Fund Holders: N/A
Corby Spirit and Wine Limited (OTCMKTS:CRBBF) is a Canadian wine company that was set up in 1859. The firm manufactures and sells spirits and wines in Canada, the United States, the United Kingdom, and other countries. Some of its well known brands include Chivas Regal, Absolut vodka, and Mumm Champagne.
A key business strategy of Corby Spirit and Wine Limited (OTCMKTS:CRBBF) is to import its spirits and products into the U.S., and on this front, the company is slated to heavily benefit from the Federal Reserve’s aggressive policy of interest rate increases. These have led to the U.S. dollar touching its strongest level in decades and it allows the company to buy more products for import.
Furthermore, its latest fiscal year results revealed that while revenue grew by only 2%, cash flows grew by $4.7 million, which indicates astute management decision making in driving down working capital requirements at a time nearly every firm is suffering from supply chain constraints and rising costs of doing business. These cash flows allowed Corby Spirit and Wine Limited (OTCMKTS:CRBBF) to declare a 24 cent dividend for a 5% yield, with the dividend marking an annual increase of 14%.
8. LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTCMKTS:LVMHF)
Number of Hedge Fund Holders: N/A
LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTCMKTS:LVMHF) is a French luxury goods company that is headquartered in Paris. The firm is known for providing wine, champagne, and spirits under several brands such as Ruinart, Hennessy, and Cape Mentelle.
LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTCMKTS:LVMHF)’s first half of 2022 results that were revealed at the end of July 2022 were nothing short of spectacular as the firm saw double digit growth rates across all of its product portfolios. This solidifies our assessment at the start of this piece that the world’s wealthiest have remained unencumbered with their spending even during times of historic inflation. During H1 2022, LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTCMKTS:LVMHF)’s revenues grew by 21%, while its second quarter revenues grew by 27%.
The bulk of the second quarter growth came organically, showing that the firm expanded its market share instead of riding the inflationary wave. During H1 2022, LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTCMKTS:LVMHF)’s wine business grew by 23%, out of which 14% was organic growth.
Barclays increased LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTCMKTS:LVMHF)’s share price target to EUR840 from EUR825 in September 2022.
7. Splash Beverage Group Inc (NYSEAMERICAN:SBEV)
Number of Hedge Fund Holders: 3
Splash Beverage Group Inc (NYSEAMERICAN:SBEV) makes tequilas, sports drinks and wine. The company recently said that Central Distributors of Las Vegas will now distribute its SALT Tequila brand across Nevada. The company is also signing several deals in other cities of the US as well as in Mexico.
Splash Beverage Group Inc (NYSEAMERICAN:SBEV) revenue jumped over 80% in the first quarter of 2022.
In June, Splash Beverage Group Inc (NYSEAMERICAN:SBEV) said it acquired 80% of Pulpoloco Sangria, a Spanish beverage company. The deal would give Splash control over the manufacturing and distribution of Pulpoloco across the US.
A total of 3 hedge funds in our database of 895 funds have stakes in Splash Beverage.
6. Eastside Distilling Inc. (NASDAQ:EAST)
Number of Hedge Fund Holders: 1
Eastside Distilling Inc. (NASDAQ:EAST) is a young wine company that was set up in 2008 and is headquartered in Portland, Oregon, the United States. It sells several kinds of alcoholic beverages and also provides canning and bottling services to the beer and cider industries.
Eastside Distilling Inc. (NASDAQ:EAST)’s latest quarter saw its sales drop but at the same time, the firm navigated both inflation driven demand drops and supply chain uncertainties by managing to significantly increase its margins. Its digital can printer can print 100% recyclable cans, lending the firm a unique advantage in today’s ESG driven investing environment. During its second quarter, the firm brought in $1.5 million in gross profit, for a sharp annual increase of $600,000 or nearly 66%. At the same time, Eastside Distilling Inc. (NASDAQ:EAST)’s gross margins stood at 31% with its spirits segment leading the charge with 53% gross margins.
The only Eastside Distilling Inc. (NASDAQ:EAST) investor in our database is Jim Simons’s Renaissance Technologies which owns 73,570 shares that are worth $51,000 as of Q2 2022.
The Duckhorn Portfolio, Inc. (NYSE:NAPA), Diageo plc (NYSE:DEO), and Constellation Brands, Inc. (NYSE:STZ) are met by Eastside Distilling Inc. (NASDAQ:EAST) in our list of favorite wine stocks.
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Disclosure: None. 10 Best Wine Stocks to Invest In 2022 is originally published on Insider Monkey.